Since 1930, natural hot water has been used to heat buildings and homes in Reykjavik. In the late 1960s a new Energy Fund, which combined the former Electricity Fund and the Geothermal Fund, was established to further increase the use of geothermal resources in the country. Loans were granted to companies for geothermal exploration and drilling. These were transformed into grants if drilling failed to produce the expected results (C40 Cities, 2008b).
In 1990, the city built the Nesjavellir geothermal station 27km away to provide hot water for the Reykjavik area by heating freshwater with geothermal steam and hot water exchangers. In 1998, the power plant began operations with two 30MW steam turbines. In 2001, a third turbine was installed and the plant enlarged from a capacity of 90MW to 120MW in 2005; today total generation is 674GWh. The latest is a second, 90MW plant, built in 2006 at Hellisheidi (C40 Cities, 2008b).
The energy crisis of the 1970s prompted the national government to develop cheaper and cleaner energy and thus increase Iceland’s security by reducing its dependence on fossil fuel imports (NATO, 2001). The crisis also triggered a new research project by the University of Iceland into hydrogen as transportation fuel. The plan was to transform all of the country’s vehicle fleet (cars, trucks, buses) as well as fishing fleet to hydrogen internal combustion and hydrogen fuel cell power. Iceland’s abundant sources of renewable energy and experience in exploiting geothermal resources made it the best location to develop a hydrogen technology not fed by fossil fuels (BRASS, 2008).
By 1998, the government had introduced a national hydrogen policy, supported by the university, which had developed and marketed the research gained in hydrogen production. Because there was no precedent for fuel cell technology using hydrogen or developing vehicles to run on hydrogen in Iceland, the country promoted itself abroad as the perfect ‘testing ground’ for this type of research, over time attracting interest from a variety of overseas companies. There were even plans with Japanese partners to develop a hydrogen shipping project (BRASS, 2008).
In 2003, the world’s first hydrogen refuelling station was opened on the site of a conventional gas station in Reykjavik. From 2003 to 2008, four hydrogen buses operated as part of Reykjavik’s public transport system, funded by the EU through the ECTOS/CUTE programme (BRASS, 2008). This allowed for several assessments in relation to the technical performance of buses, the effectiveness of hydrogen infrastructure in Iceland, and the socioeconomic and environmental implications of using hydrogen as an energy source. By 2005, another hydrogen fuel station was in operation producing hydrogen on site through electrolysis. It is envisaged that by mid-2009, around 30 hydrogen-powered vehicles will be in use (Orkuveita Reykjavikur, 2008).
In addition to hydrogen-based vehicles, there are 50 CNG vehicles, 46 bifuel vehicles and 4 dedicated heavy-duty natural gas vehicles in operation in Iceland. The bio-methane comes from Reykjavik’s landfill site, operated by the waste management company SORPA (Orkuveita Reykjavikur, 2008).
The UN University Geothermal Training Program (UNU-GTP) and Iceland’s National Energy Authority established a training programme in 1968 to help countries with significant geothermal resources build specialists on geothermal exploration and sustainable development via specialized training. By 2005, 338 scientists and engineers from 39 countries had completed training. Today UNU-GTP graduates are among the leading specialists in geothermal R&D.
A research fund was set up by the local utility, Reykjavik Energy in collaboration with the universities in Iceland’s capital for energy and environmental research. Each year Reykjavik Energy contributes approximately 0.5 per cent of its revenues towards the fund, as an addition to the initial capital contribution of ISK100 million ($783,700) (Orkuveita Reykjavikur, 2008).